5yr fixed rate ends in October, what next?

sistafromanothermista

Hi:o
My 5 yr fixed rate with nationwide ends in October. I've never had a mortgage before so what happens next?
I have googled and *think* i revert to a svr or bvr tracker and as my arrangement was made before apr 2009 looks as if it will revert to a lower rate (at the mo i'm at 6.5% fixed and looking at 3%)
Does this also mean as its half i will pay half of what i pay now?
I'm a little confused, does it just switch automatically or do i need to arrange to go in and see someone?

Thanks in advance

The_J

Reverting to the variable rate will be automatic.

Your new monthly payment will depend on a variety of factors.

You will be able to renegotiate a new deal either to another lender or with Nationwide. You should weigh up whether to take the variable rate and run the risk of rates increasing (you could of course fix then) or take a fixed rate now.

If it is the BMR I would personally stay on that but carry on paying what you have been paying. This will pay off your mortgage faster and leave you in a stronger position for the inevitably higher rates of the future.

opinions4u

Assuming your new rate is their 2.5% rate, I'd do exactly what the post above suggests.

Get yourself ahead before rates go back up again.

sistafromanothermista

Thanks, what i'd like to do is use the 'saved' cash to pay off all out credit cards first then hopefully go back to overpaying on the mortgage.
Would the payments go down by 50% i pay £1118 @ 6.5 ish% so would it be £500 @ 3% as logic would suggest or not?

opinions4u

sistafromanothermista wrote: »

Thanks, what i'd like to do is use the 'saved' cash to pay off all out credit cards first then hopefully go back to overpaying on the mortgage.

Excellent approach.

Would the payments go down by 50% i pay £1118 @ 6.5 ish% so would it be £500 @ 3% as logic would suggest or not?

What's the current debt and remaining term?

Google BBC mortgage calculator and see what it says!

sistafromanothermista

opinions4u wrote: »

Excellent approach.


What's the current debt and remaining term?

Google BBC mortgage calculator and see what it says!

Thanks:D this has really helped.

The_J

sistafromanothermista wrote: »

Thanks, what i'd like to do is use the 'saved' cash to pay off all out credit cards first then hopefully go back to overpaying on the mortgage.
Would the payments go down by 50% i pay £1118 @ 6.5 ish% so would it be £500 @ 3% as logic would suggest or not?

Knowing this I would agree with opinions and suggest the higher interest debt be paid off first. Do not get used to the low payment, won't be like that forever.

sistafromanothermista

Does anyone know if we could go interest only for 12 months then back onto repayment? Thinking about the post above i think it would be wise to try and pay off as much of our credit card debt as possible in case the mortgage rates go up in the future....

marathonic

sistafromanothermista wrote: »

Does anyone know if we could go interest only for 12 months then back onto repayment? Thinking about the post above i think it would be wise to try and pay off as much of our credit card debt as possible in case the mortgage rates go up in the future....

Interest only will be tough. If you have a good credit rating, a better (and easier) option would be to apply for a 0% Balance Transfer card and pay it off over the interest free term.

For example, the Barclay Platinum is interest free over 22 months (http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards#barclaycard22).

If you were approved for that, you'd transfer the balances of your other cards over to it, spend nothing on the new card, divide the balance by 22 and pay that towards the card on a monthly basis. Then allocate any excess money to the mortgage.

dimbo61

Lenders are getting very tough about allowing customers onto Interest only even for 12 months.
I doubt your mortgage will be 1/2 what you are paying now as you are paying capital and interest and its only the INTEREST part that is going down